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Datuk Seri Najib Razak must hasten reforms, starting with dismantling the lopsided “New Economic Policy” that dampens competition as the world will not wait for Malaysia to catch up, a popular Bloomberg columnist said today.

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William Pesek said the real issue was Malaysia’s policies to raise its economic game amid growing competition from its Asian neighbours.

“The world won’t wait for Malaysia,” he said in an piece on The Ticker, Bloomberg’s commentary on economics, politics and the world.

Pesek urged Najib (picture) to take bold action now and declare an end to policies that were holding Malaysia back, adding that doing so “would cheer investors” who were growing increasingly sceptical of his pledge to reform.

“It’s high time for Prime Minister Najib Razak to change the story, to shift the focus toward reforms, not tabloid scandals. Announcing the end of affirmative-action policies that hurt Malaysia's competitiveness might be just the thing,” he said.

He pointed that the government’s “New Economic Policy” continued to favour the majority Malay community had outlived its usefulness after more than 40 years and urged Najib to remove this hurdle to economic growth.

“It limits investment, stifles competition and keeps the economy from becoming a meritocracy,” Pesek said.

He noted that China, India and Malaysia’s Southeast Asian neighbours Indonesia, Thailand and Vietnam were evolving swiftly and would be able to outstrip their competition within a few years.

He further warned that developing economies needed to “watch their backs”.

He said Malaysia’s huge 5.8 per cent growth potential deserved attention as it stood to join the ranks of Asia’s top economies, but foreign investors were being increasingly sceptical that the country could live up to its promise with the Najib government being constantly distracted by other issues.

He listed Opposition leader Datuk Seri Anwar Ibrahim’s recently-concluded sodomy trial; the religious tensions between Malaysia’s Muslim majority and its minority Christians; and “murder investigations involving high-ranking officials” as examples in his opinion piece.

He advised: “It’s time to take ‘CSI: Malaysia’ off the air. An unscripted bout of economic change could be just the thing.”

Malaysia’s other observers have been saying the same thing.

“The public is looking for leaders who are able to manage Malaysia through economic turmoil,” Bridget Welsh, a political science lecturer at Singapore Management University was quoted as saying this week by Bloomberg.

Najib must persuade Malaysia’s 28 million population they are the right choice to overhaul the country’s US$238 billion (RM749.75 billion) economy laden with economic policies that are seen to benefit only one race and which the World Bank has warned is holding back the country’s growth.

Worried local economists have warned Putrajaya that federal revenue was growing too slowly compared to its sovereign debt and urged him to quicken the pace of his economic reforms to claw back foreign investor support.

Malaysia’s national debt will hit 100 per cent of the Gross Domestic Product (GDP) by 2019 should Putrajaya continue to borrow more than it earns, economists say.

Malaysian Institute of Economic Research (MIER) distinguished fellow Dato’ Dr Mohd Ariff Abdul Kareem (left) warned that the federal government revenue was growing too slowly to keep up with its borrowings, which hit 53.1 per cent of GDP in 2010.

He said while the current size of government debt relative to GDP was not troubling, the pace of its growth in recent years was cause for concern.Debt-to-GDP ratio jumped from 41.4 per cent in 2008 to 53.1 per cent in 2010 while government debt grew 14.6 per cent in 2008 and 18.3 per cent in 2009, far outpacing the country’s GDP growth, Ariff noted.

“If nothing is done to reverse the current trends in government expenditures and revenues, extrapolation suggests that Malaysia’s national debt will explode to 100 per cent of GDP by 2019. Should the debt growth gather speed, this can happen sooner,” he told The Malaysian Insider via e-mail.

Ariff pointed out that while government spending on fiscal stimulus packages in the face of global financial crises has mostly translated into infrastructure development, there was a need to trim fat from the bloated civil service, which formed a significant chunk of Putrajaya’s operating expenditure.

He said emoluments to Malaysia’s civil service — the largest per capita in the Asia-Pacific according to the OECD — have risen from 23.3 per cent of the operating budget in 2007 to 33.1 per cent in 2010, rising to 41.6 per cent in 2010 if pensions were included.

This was a major financial burden on the government, as were the cost overruns, wastages and leakages exposed annually by the Auditor-General, the Professor for International Finance at the International Centre for Education in Islamic Finance (INCEIF) said.

“There is certainly a need to rein in government operating expenditure, which must include a downsizing of the bloated civil service, to bring government procurements under greater scrutiny with increased transparency and accountability and to undertake serious tax reforms to raise more revenue,” Ariff added.

RAM Holdings Bhd chief economist Dr Yeah Kim Leng (right) said there needs to be political will on the part of Putrajaya to execute its Government Transformation Plan (GTP), which is partly aimed at stopping the fiscal deficit from rising further.

“We must follow it religiously because [the fiscal deficit] is currently the main vulnerability of Malaysia’s economy,” he said.

Yeah said Malaysia would be on the right track to keeping its fiscal deficit in check in the medium to long term if Putrajaya remained committed to this plan but cautioned that this was premised on an annual GDP growth of five to six per cent.

This was because any slowdown in the economy would lead to lower wages and higher unemployment, which would in turn negatively impact tax revenues, he said.

“There is a close correlation between growth and government revenue,” he said, noting that for every one per cent decrease in GDP growth, tax collection will drop by 0.8 per cent.During a slowdown we can expect government fiscal deficit to actually widen.”

Yeah added that the government does not have long to consolidate its fiscal position as income from the oil and gas sector, which makes up about 40 per cent of total government revenue, was expected to fall over the next five to 10 years as Malaysia’s oil reserves dwindle.

 Just how representative of the wishes of the electorate — you and me — is Indian democracy? How representative are our elected representatives? And the answer is: Not very representative at all. According to a TOI survey of the results of the 2007 assembly polls in UP, 20 seats out of a total 403 were won by contestants who managed to get just 10%, or even less of the vote.

In another 306 constituencies the winners came in with between 10% and 20% of the vote. Another 66 won by bagging 20% to 25% of the ballot. Ten seats were won by 25% to 30% of votes cast and only one seat scored above 30%. Moreover, the margins between the winners and losers were wafer-thin. In 122 constituencies the winner had margins of between 1,001 and 5,000. The average for 403 constituencies was 9,231. In other words the 'popular mandate' that the successful candidates could lay claim to wasn't all that popular, or representative of the people's will, after all.

Admittedly UP's is something of a special case. Thanks to a proliferation of political parties, multi-cornered contests which split the vote are the norm rather than the exception. This, combined with low voter turnout, resulted in the election of what might be called a 'minority sarkar', a government brought to office by a minority among the state's total electorate which today is estimated at some 12.5 crore voters.

While UP stands out as an example of less-than-representative governments, the picture across the country, at both the state and the central level, is not very different. With the growth of regional parties and the onset of the so-called 'coalition era', governments with minority mandates have become the rule. A prime example is the Congress-led — some might say misled — UPA-II in which supposed allies and supporters — ranging from the Trinamool Congress to the DMK, from the Lalu's RJD to Mulayam's SP — impose the will of their own divergent constituencies on the collective agenda, leading to what is increasingly being described as 'policy paralysis'.

As UP and four other states go to the hustings, in an overture to the 2014 general elections, there is likely to be more debate about the need for electoral reform to help make our elected representatives more truly representative of, and more accountable to, the electorate. Amendments to the election process — including the right to recall or reject candidates, and proportional representation on the basis of the percentage of votes polled by contestants — have often been suggested and discussed. But as the chief election commissioner has pointed out on the issue of the right to recall and the right to reject candidates, such changes would make our democracy even more unpredictably volatile than it already is. We'd be doing nothing but having non-stop elections, over and over again, in a ballot box version of Trotsky's idea of perpetual revolution: perpetual polling.

So what's the solution, if indeed there is one? Team Anna has not only thought of a solution but has begun to put it in practice. Based on the principle that the problems of democracy can't be tackled by restricting democracy but by enlarging it, Team Anna's solution to what it believes is a non-representative, or non-responsive, government is for people directly to elect themselves as their own representatives forming their own government, bypassing minor road bumps like Parliament and the Constitution.

Team Anna's vision of government for the people, by the people and of the people is precisely that: the people, all 1.2 billion of us, are the government. Elected representatives? No thanks. We'll be our own self-elected representatives. How much more representative of popular will can any democracy — or Anna-rchy — be?